Natsume goes to a dam and finds a town that had been submerged in water. Just then, Natsume gets possessed by a yokai and falls unconscious.

Natsume is visited by the village's local god who is currently fading because of the lack of devotees.

Natsume discovers that the heirloom "Book of Friends" that his grandmother, Reiko, gave him possesses the names of the spirits she defeated and bound to her will. Assisted by a cat whom Natsume addresses as Nyanko-Sensei (lit. Master Little Meow), Natsume aims to return all of the names to their rightful owners.

Natsume is implored to help spirits who are currently being exorcised. He finds a kindred spirit in Tanuma, a boy who also senses spirits although not as powerful as Natsume.

Tanuma finds out Nyanko-Sensei is a spirit. Tanuma and Natsume enjoy the autumn festival and previous acquaintances are seen again.

Natsume goes to a hot spring for a school trip, with an errand from Shigeru to pick up teacups from a near by pottery. While there he meets and helps a little fox spirit, who quickly grows attached to him.

Natsume meets a spirit who used to be friends with a man who could also see spirits, but one day lost this ability.

Natsume's secret is found out by Sasada, the class president, during the "Trial of Courage." She asks for his help to find the spirit that lives in the abandoned school. Natsume denies the fact that he can see anything, but she won't take no for an answer. Meanwhile, the spirit, Shigure, captures the rest of their school mates, in fury of the school being torn down...

Natsume comes across an old ticket in Reiko's belongings and decides to go to the abandoned train station to see why she kept it. There, he meets a slow witted spirit named Santo, who was waiting for Reiko the entire time to go Kiriganuma, to see and make up with his friend, Mikuri, but the trip isn't as easy as it first seems...

Natsume is cursed by an evil spirit which is sealed to a tree, not wanting to trouble his adopted family, he decided to run away from home.

Natsume is possessed by a sick koto player, whose friend wants her to be able to play one last time.

Natsume meets a popular actor named Natori Shuuichi who can also see spirits, and has a side job as an exorcist.

When Natsume finally has enough of Nyanko's behavior Nyanko leaves, wandering about by himself and causing trouble.